FAT CAT CONFIDENTIAL

Critics on the left want redistribution of income. Joe the plumber heard this directly from candidate Obama. The liberal view of the overripe fruit to be picked for redistribution is quoted from one respondent to my last column:
“ the word ‘earn’ carries a connotation of hard work and just desserts, which doesn’t mean sitting on your behind and collecting dividend income from trust funds and stock portfolios….most of America’s top earners have investments, often inherited, which bring them income without a lick of work.” A nation of Daddy Warbucks, pockets stuffed with Monopoly money.
I believe I’m in the top 20% of earners in the U.S. My parents grew up poor in New York, my father working two and sometimes three jobs to support his family. My older sister dropped out after one semester in college, and my older brother graduated from several years of reform school. My parents stressed to me the importance of hard work and education. I went through college on a merit scholarship, loans, the money I earned working during holidays and summers, and about $1,000 per year from my parents. I spent four years in medical school accruing more debt instead of earning income. I then worked 110 hours per week as an intern at less than $2.00 per hour, and invested four more years training at very low levels of salary. Money was thin during my first years of practice in Massachusetts, but my wife and I immediately began saving for retirement. Money was put away regularly for college starting when my daughter was three and my son was one. For many years our house was furnished with leftovers, and some rooms had no furniture at all. We bought cheap cars so that we could save. And yes, we put that money into investments: retirement funds, my office, our home, and we get dividends from Massachusetts municipal bonds. Over thirty years, it adds up. We made these choices to work hard, save, and not spend. To the left I am a fat cat ready to skin.
This is the story of small business men and women all across America. They work hard and long hours, as there is no boss more demanding then success or failure that is solely your own responsibility. They put up their own money and are at risk for the money they borrow and unpaid bills if the business fails. These folks create commerce where nothing was before, without which the government has little to tax. These business people create jobs. They are everyday heroes. I hope they succeed and invest money in stocks and bonds that can be recirculated to build roads, schools, and other businesses.
Corporate CEOs are suspected villains. The press gets apoplectic when a corporate CEO receives the same income as Johnny Depp in Pirates of the Caribbean. I’m thankful for these CEOs. They are highly trained and experienced stewards of big business. Without their success our companies fail here and in competition with foreign concerns. Economic activity is lost, and there is less demand for their suppliers and vendors. Jobs are lost, and there is less wealth for the government to tax. They produce value for their shareholders, but their success is indispensable to our society. Yes, there are corrupt CEOs as there are corrupt politicians, but I would have our children collect trading cards of our successful CEOs over sports stars.
Governmental redistribution of income is not a new idea.
“From each according to his abilities, to each according to his needs.” Karl Marx
This didn’t work very well for the Soviet Union, Communist China, North Korea, Cuba, Venezuela, and now Greece. Many established socialized countries are working hard to undo the last forty years of redistributive government. Sweden and Canada are prime examples of the prosperity that follows the reduction in government size and control. Our current government is running in the opposite direction. Some people won’t learn.
A just society certainly protects the poor and sick. Great disparities of income and class warfare are not desirable. Stripping high earners of income to redistribute wealth penalizes hard work, investment, and innovation, and is scapegoating. The best way to reduce the gap between rich and poor is to improve opportunity at the bottom. Improved education particularly in the sciences and vocational training, and government policies that encourage the return of jobs to the U.S. such as a sharp reduction in corporate tax rates and relief from over-regulation would be more fruitful approaches.

Banning Fairness

A gaggle of activists flocked into Boston demanding a new state tax code that would shift the burden to higher income residents who are accused of not paying their fair share. The President is hitting the campaign stump, promoting the maintenance of an obscene level of government spending and debt in the protection of America as a fair society. Honestly, I don’t know what they exactly mean.

The word “fair” should be removed from adult discourse. It is a subversive word. “Fair” is supposed to mean that both parties in an agreement have determined that the value in the outcome is deemed equal to each, but the word in politics is most often used as a weapon to manipulate and sabotage the person with whom you are not agreeing. There are presumptions made by the use of this word in political discourse. In order for one position to be fair and therefore right, there has to be the assumption that one side is truly right and the other definitely wrong. Without that assumption, the side that plays the “fair” card is simply expressing a subjective opinion, which carries no more weight than the viewpoint of other side. Every ten year old recognizes this. Using fairness also presumes that the party arguing for fairness knows what is right and wrong and that the other side either lives in ignorance, or is to selfish to abide by this moral certainty. The side that calls on fairness to win the argument stakes out the moral high ground, with the hope that the other party will be shamed and intimidated into submission. Fairness then requires that something of value is lost to the side that is not fair, because without value, there is no concern about fairness.

We should agree to ban the use of “fair” after we leave the fifth grade playground. “Fair” should be replaced with “legal”, “contractual”, and “agreed-upon” to more reflect adult reality. By the way, the more academic version “equity” should also be thrown out on the same heap.

In the name of fairness, Democrats at the federal level are shielding entitlement spending from any reconsideration of structure or spending levels. This is in the face of an immense debt burden that looms over the future of the next generations. My parent’s generation suffered through the twin traumas of the Great Depression and World War II, and then buckled down to build an industrial giant that they passed onto their children. My generation, faced with the likelihood of profoundly damaging the prospects of our children’s future, is whining about getting a fair share of entitlement spending in Medicare and social security. This doesn’t seem too fair to me. For the good of the country’s impending financial catastrophe, let’s agree to postponing eligibility for these entitlements by one year, a maneuver that would save billions, assuming that the federal government could keep itself from turning around and then squandering those savings.

I am not against graduated income taxes. However, the top 5% of Americans earn 33% of the income in the U.S. and pay 57% of federal income taxes. The top 25% on the income scale earn 66% of the U.S. totaI and pay 85% of federal taxes. Over 45% of Americans pay no income taxes at all. So, what is fair, and what is fair enough? Money gets redistributed from one person who earned it to someone else who didn’t. Who is in a rightful position to make this determination, and on what moral certainty do they rely?

I believe that all Americans with any income should pay some state and federal taxes, even if the amount is quite nominal. There are two reasons for this: first, every citizen benefits from the services provided by each level of government, whether it is for schools, roads, police and fire protection, or national defense, and should contribute to the cost. More importantly, we as a people can never have a real conversation about the level of government spending if nearly one half of our citizens don’t care because they pay no taxes and yet enjoy those benefits at the expense of the other half. Every citizen with an income should pay some taxes. I think that’s fair.

Musings on THE Birth Certficate

I withheld this column last week to congratulate President Obama on dispatching Osama Bin Laden.

I also thank Obama for finally releasing his birth certificate and ending the torment that was this issue. The President is correct; it was an unnecessary distraction from the profound problems we face as a nation. However, the President was fully complicit in perpetuating the birther thing by not releasing the document far earlier. Was his delay an act of stubbornness? Obama is no fool. He must have calculated that keeping this alive helped him politically. The prevailing wisdom is that it marginalized his conservative opposition. Perhaps Obama allowed the issue to percolate precisely because it was a distraction from the bad economic, political, and international news that is ingrained in the fabric of his presidency. Whatever Obama’s reasons were for letting this nonsense fester, it did him and the nation no good. However, there was something real behind the life that this issue took on. That is the feeling that the President is somehow “foreign”.

I have no doubt that there is an unfortunate racial aspect to this perception, and it is compounded by the President having a name that is distinctly Islamic at a time when the West is in the midst of a civilizational cold war with the Muslim world. I suspect that Obama the person has had to deal with this throughout his entire life, and to his and America’s credit he has obviously navigated very successfully. However, most of Obama’s foreignness has to do with his character and politics.

Despite the efforts of the media and Obama to minimize the significance of the personal associations he has had with the likes of Ayers, Reverend Wright, and more recently Pastor Smith, a narrative develops of a President comfortable in a world of extreme politics. The beliefs reflected by these chosen associations are far distant from those of a majority of Americans.

Obama’s campaign of apology for the U.S. in foreign lands that dominated his first year in office put the President on the outside. Americans are generally proud of their role in the world. Though by no means perfect, our system generates great wealth, innovation, and freedom, and we as a nation have sacrificed treasure and life to support the cause of liberty throughout the world. Having the President who is the face of America demean the nation to foreigners implies a disloyalty not readily accepted of a President.

Obama seems to be a closed and distant personality as a public figure. No matter how hard I listen to his speeches, I find it almost impossible to get a read on what he is thinking. I’m not sure if it is because his content is often inconsistent or purposely vague, but the President often seems to be studiously hiding his real intentions. As such, the American public, both on the right and the left, have in him a blank slate, ascribing to him beliefs of their own for good or bad that his later behaviors often belie. Being difficult to connect with, Obama has been an unknown.

Mr. Obama is not the first president I have found alien. I was initially appalled by the election of Ronald Reagan who seemed to be such an intellectual lightweight. Stories of his falling asleep in cabinet meetings and his “down home” speeches made me cringe. Then I had an epiphany about this man. As I listened to one of his homilies, I realized that Reagan was not talking to me, a Northeast Ivy Leaguer. He was addressing that large body on Americans throughout Midwest, South, and West who are our blue collar working neighbors and who are the heart of this nation. From this perspective, Reagan’s communication was true genius. As his presidency unfolded, Reagan’s remarkable qualities became evident.

I can’t tell to whom Obama speaks.

Perhaps what makes this president most foreign to many Americans is what seems to be his view of America. Joe the Plumber heard that we need to redistribute wealth. 45% of Americans pay no federal income taxes. More money is being paid out through entitlements than is coming into the government in taxes. We learned to work hard, succeed and build for our families and country. Our children will work hard to give up the fruits of their labor to a government of entitlement that is buried in debt. Obama’s America is a foreign country. What America is this? Where’s the birth certificate?

Health Care and Liberty

This is a Paul Revere moment, a wakeup call. Deval Patrick and the Massachusetts State House are legislating a fundamental change in the funding of health care. In the process, basic freedoms are being stripped from the citizens of Massachusetts, and the population is unaware.

What is being ordained in the name of cost control is a payment system known as capitation, or global payment. The State/Insurance Industry consortium will mandate that the healthcare provider is given a lump sum payment for each patient, from which the cost for services for that person will be deducted. The healthcare provider keeps what’s left. The less spent on that person, the more the provider earns.

To the consumer, healthcare is still “free”, as insurance pay for it all. There still remains reason for the consumer to expect unlimited services. Under capitation, the responsibility for saying no to the consumer is passed downstream from the government or insurer to the healthcare provider, setting up a new perverse incentive in which the patient-provider relationship is potentially more adversarial. Consumers have to worry about whether decisions made for their healthcare are more about the provider’s bottom line than their well being.

The medical community in Northampton worked with capitation some twenty years ago, as Blue Cross / Blue Shield trialed a system called the Western Mass. Health Plan. It failed, as neither the physicians nor the patients tolerated it. Now we’re back to the future.

What is now far more dangerous is the erosion of individual freedom brought about by this healthcare payment reform. The citizen’s sovereignty over basic decision making that intimately affects the individual and family is stripped away. Imagine if access to food in Massachusetts was organized in the same way by mandate of the state government. The supermarket gets $400 per month to feed your family. The owner consults expert guidelines and makes food choices decided to be in your family’s interests, and keeps what he does not spend on you. No American would tolerate this usurpation of authority in our daily lives, and yet the citizens of the Commonwealth will be forced to accept this in our medical decision making. By putting the healthcare provider on the hook for this money, the “local expert” will make the healthcare choices, perhaps in conflict with the unique needs of each individual and family.

By this new legislation put forward by the Governor, he has arrogantly assumed that the state does have the right to appropriate self governance in healthcare. The cadre of government experts and paternalistic academics that have crafted this approach presume that the consumer is incapable of making reasoned decisions about the best way to spend limited health care dollars. This is not nearly my experience as a practicing physician for over 25 years. Once given good information, I have seen that individuals are great at making decisions that work for them and their families.

The Governor is proud that this new legislation is a partnership between the government, Insurance, and healthcare industries. Strikingly missing from this discussion is the input and partnership of the citizen. I have been at many professional forums about healthcare payment reform given by government, academic and insurance experts. In all of them, the citizen is simply fodder for the system, subject to processing. None of these discussions are premised on the primacy of a free and informed individual at the core of controlling health care decision making and the control of healthcare costs.

It is the consumer’s money that pays for health care. Whether the insurance premium is paid for directly or is part of the employee compensation package, the dollars spent are ours. The government subsidized systems such as Medicare, Medicaid, or the Massachusetts Commonwealth Care and Connector, are paid for by our taxes. Creating a health care financing system that puts the consumer in charge of the dollar, rewards frugality, and protects against disaster is not difficult. Using a combination of healthcare savings accounts and catastrophic insurance, consumers shop for the healthcare they want, and keep the money they do not spend. This has already been done statewide in Indiana.

If we in Massachusetts cede control over aspects of our lives, either out of a lack of vigilance or inaction, then we deserve to lose our freedoms.

“I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.” Thomas Jefferson.

Tea Party Reflections: February Column

A friend expressed great surprise that I had interacted with the “extremist” right-wing Tea Parties during my campaign for Congress in Southern Massachusetts. He is intelligent and politically moderate, and so his response brought into focus the pervasiveness and persuasiveness of the media’s misrepresentations of the Tea Party movement.
This is a firsthand account: I have been there myself. I have spoken to Tea Party groups of less than twenty and to over 200 members. These organizations reside throughout our region, including the Knox Trail Tea Party, the Worcester, Paxton-Rutland-Leicester, Webster-Dudley-Oxford, Blackstone, Sutton, and the Calvin Coolidge Tea Parties. There are also the 9/12 groups of Chicopee and East Longmeadow, as well as the libertarian Massachusetts LPA. I have been to their rallies, and I have talked to these folks individually. They were an integral part of my campaign, and I prized their support.
The people who joined to Tea Parties are your neighbors. They work hard for a living, or are retired folks, though some of them lost their jobs during this terrible recession. They may be blue collar or they are college educated professionals. It is my experience that there were more women than men. Some Tea Party members are Republicans, fewer were Democrats, and most are political independents. Many of them were never involved in politics before.
The Tea Partiers love their families as well as their country, and these twin drives motivate them to leave their homes behind for meetings and rallies on nights and weekends, after long days at work. They are passionate about their patriotism, but theirs is not a blind allegiance to the flag. The Tea Parties have a deep, intuitive understanding of the spirit and values embodied by U.S. Constitution, those of defending a society that treasures and protects individual freedom. The government exists through the permission of the populace, and the impetus for decision making is decentralized. They are fiscal conservatives, recognizing the necessity to give up some of the fruits of their labor to the government through taxes, but demanding that their hard earned dollars are used responsibly. They seek to preserve these values for the society that will be inherited by their children.
Tea Party members are angry about the erosion of these values, but they do not hate. I have been at many different Tea Party events during my campaign, and never saw evidence of racism. Never. Not once. Attacks on the Tea Party movement as racist is at best misguided and misinformed, but more likely are attempts by political opponents to marginalize these good people and neutralize their popular political clout. I find these attacks to be malicious.
Tea Party members are a cross section of common folks, who are willing to part from their families to resist the encroachment of an enlarging centralized government that is seen as insinuating itself in the economic lives and personal decision making of its people. The Tea Party members attend local meetings, and have travelled to the nation’s capitol in rallies of hundreds of thousands. It is a broad and spontaneous popular movement, and when I have been at these meetings, I get a sense of the fire that lit the American Revolution. I am thankful that this passion for liberty still lives and that the descendents of revolution are yet with us.
To dismiss the Tea Party is to miss the chance to witness a remarkable movement in American history. I have been lucky to have been present through two great social upwellings during my life, that of the “1960’s” and now the Tea Party movement. Certainly, the nature of the politics of these two movements are different and both are rooted in their respective eras, but the similarity of emotion and romance of a people seeking to turn the values of our society is unmistakable. Both have altered the trajectory of American history.
The future of the Tea Party is of course uncharted. It could peter out after its recent electoral success. It could develop into its own political party, or fuel the evolution and revitalization of the Republican Party. It wrestles with remaining a movement dedicated to issues of liberty and fiscal conservatism or taking positions on some of the “social issues” such as abortion rights, on which most of the Tea Party membership does not share universal agreement.
However the Tea Party’s future unfolds, I am glad they are here, and this nation needs their continued vigilance in the future.

The Political Extorion Epidemic

Manipulation in politics is like the weather in New England. They are the natural order of things and complaining about them will get you nowhere. However, the recent political battle in Washington over the Bush tax cuts has put me over the edge, and I’m baying at the moon.

Let me blame Congressman Anthony Weiner (Dem) of New York and his colleagues for inspiring this column. They made the rounds on cable news and talk radio during the fight over the extension of the Bush tax rates, and their willful and blatant attempt to manipulate voters in support of their position was well beyond tolerance. These partisans aggressively attacked the extension of the existing tax rates as a gift to “millionaires and billionaires”, and as a windfall for the “super wealthy and fabulously rich”. They knew full well, and must have believed that the public did not know, that higher tax rates preferred by Weiner and his coalition began with individuals at incomes of $200,000 and married couples of $250,000. These people are hardly “fabulously wealthy”, they are far more numerous than the millionaires, and are predominantly small business owners. Weiner et al proclaimed over various cable news networks that they were protecting the middle class, never once mentioning that the preservation of current tax rates for those above $200,000 in income did not affect middle class tax rates. Nor do they concede that an alternative protection for all Americans against future tax increases is to reduce government spending. These facts about the tax rate extension are purposely not divulged by these proponents of higher taxes, and the class warfare distortions offered by Weiner and colleagues were designed to whip up voter antipathy towards this bill.

Do our politicians believe that the newspeak use of misrepresentative names on major pieces of legislation will fool the public? Is the new health care reform bill really a “Patient Protection and Affordable Care Act”? I suppose it does protect those with pre-existing conditions from losing their coverage, and it does extend coverage to those who can’t pay for insurance by opening Medicaid coverage which is then free to them. Under this act health insurance becomes far more expensive for the vast majority of Americans who currently purchase their own insurance and to the employers who cover so many of our citizens. The subsidized coverage mandated by this bill adds at least hundreds of billions to the federal deficits to be picked up by future taxpayers, and counts on hundreds of billions to be sacrificed from Medicare, threatening coverage for seniors. This is hardly the definition of “Protection and Affordable”. The “Dream Act” was the title for the recently failed legislation on illegal immigration. How about a simple “Act Relative to Alternative Paths to Citizenship”? As citizens, we need a discussion on how we balance our laws and the needs of our nation with a humane approach to the illegal immigrants. We don’t need an advertising jingle.

Negative labels are used in political discourse as weapons of personal assault to silence opposition by impugning their integrity and undermining their moral authority. To neutralize the influence of the Tea Parties, they were stamped as “racists” in the media despite being untrue. Discussions about immigration reform are fought through accusations of ”immigrant bashing”. There are many of these labels in play. The use of assaultive labeling is designed to win political battles by giving the user the moral high ground from which the opponent is bullied and shamed, and from which a supporting constituency can be built and manipulated. It is a vicious strategy.

Politicians violate our democracy when obscuring their positions on issues and by hiding their background in order to win election. The voter must know a candidate’s beliefs in order to make a reasoned judgment on who will make decisions in government. No single individual in office is so important as to subvert the democratic process.

I fully acknowledge that both sides of the political spectrum distort and manipulate, but we confront serious issues as a nation. We need to discuss the wisdom of raising taxes during a recession, and how progressive we want our tax code. How much do we want our government to grow and how much of our personal and societal treasure should the government absorb? Distorting truth to progress a particular position poisons reasonable discussion and destroys deliberation. We do have some politicians who speak their truths and do not resort to lies: they are called statesmen.

Instate Tuition for Illegal Immigrants: Gazette Column 1

Within two weeks of being elected, Governor Patrick resurrected a proposal for instate tuition for illegal immigrants. With a taxpayer subsidy of $9,000 per year at current charges for in-state versus out-of-state tuition, and a recent estimate of 500 eligible students, this would amount to 18 million dollars of taxpayer dollars over four years at a time when both the state and UMass budgets are under tremendous pressure. Just last month UMass Amherst announced an 8% budget shortfall for the next fiscal year and is hoping for more out of state students to make up the difference. With a faltering economy, the taxpayers of Massachusetts are hurting. It is no surprise that Governor Patrick waited until after the election to bring up this idea. This proposal was killed in Massachusetts four years ago, but here it is again. Elections do have consequences.
Why offer this particular benefit for this group? Certainly, more basic entitlements that could be given to illegal immigrants are beyond the limits that are acceptable to taxpayers. We are not providing taxpayer supported housing. We are not providing healthcare insurance or food stamps, or subsidies for heating costs. As the parents of these students are illegally in this country and therefore are likely to have little reportable income, will we then be extending further financial aid beyond the in state tuition break to these families to help them afford four years of education? Where does it end?
Implicit in this proposal is that the children of illegal immigrants who reside in Massachusetts are more valued by the people of Massachusetts than the children of fellow American citizens who happen to reside outside the state. Geography trumps citizenship as the out of state American family is not offered this same taxpayer generosity of the lower tuition. If these children are to be the responsibility of the taxpayers of their state of origin who should bear this financial burden, then the same argument can be made for the children of illegal immigrants extending to their nation of origin. It is very possible that the American children from other states are also poor and are in need of access to affordable higher education as they may come from states without state university systems. We are all descended from immigrants, and it is not the fault of these children that they were brought here illegally. Given the enormous price of higher education in the U.S., it is not the fault of out of state American families that they are also looking for relief from the burden of the costs of educating their children. The taxpayers of Massachusetts are being positioned to extend our hand preferentially to the families that are here illegally.
We must consider the issue of fairness to the Massachusetts taxpaying family. The cost of educating their children is one of the greatest financial difficulties faced by most families. There are no tax breaks for families that must shoulder costs that now exceed 50,000$ each year for a private college education. As the money for the in-state tuition subsidy for children of illegal immigrants comes from taxpayer dollars, we should consider the need for relief of Massachusetts families as their tax dollars are subsidizing this new entitlement. Perhaps this proposal should be coupled with tax deductions for education costs for residents of Massachusetts, though I have no doubt that the Governor would scream that this loss of revenue is not affordable.
Offering entitlements to illegal immigrants incentivizes their setting up residence in Massachusetts, and the taxpayers of this state must recognize that there are costs associated with this. It costs taxpayer dollars for the public education of these children, and medical costs that are not reimbursed become a taxpayer liability. There is the loss of tax revenues by economic activity that is driven underground. The underground economy is even now a great problem in Massachusetts. In my recent Congressional campaign through Southern Massachusetts, I heard from builders and contractors throughout the region that they are losing income and are having their businesses threatened by illegal immigrants from Brazil who are living in Massachusetts and are working off the books. This shift of economic activity is hidden from taxes.
No one wants to seem inhospitable to immigrant families seeking a better life, but preferential treatment of foreign nationals that break our immigration laws over fellow American citizens is problematic. The pressures of a troubled economy and the difficulties of our taxpaying families should be first to get our attention.